The world's large banking markets are at an inflexion point. Shareholders, senior management and other stakeholders have now begun to realize that this is now the point of time in the economic cycle when top line growth is petering out.

Classical economic theory suggests that developing economies should catch up with developed economies provided they pursue broadly growth-friendly policies. Numerous less developed countries have made rapid progression over the past 40 years, with many South-East Asian countries as notable examples. Recent attention has focused on the economies of Brazil, China, India and Russia (BRIC). Various studies indicate that the G7 (BRIC + Turkey + Indonesia + Mexico) group of countries would be 25% larger than the G7 as against being only 20% of the G7 market currently, measured in dollar terms at MER (Market Exchange Rates).

The banking sector plays a key role in any advanced economy; the advancement of an economy and its banking sector go hand in hand. The banking sector both enables growth and benefits from growth. As economies move away from agriculture through industrialization and into services, financial services and banking account for an increasing share of GDP. That means as countries develop, the growth of the banking sector must be more than the growth of the economy as a whole. It is easier to consider the ratio of domestic credit to GDP to show the relative development of banking sectors and banking sector penetration.

In general, countries with high GDP per income have a higher domestic credit to GDP ratio. The notable exceptions are China which has a higher ratio than those of its emerging peers and USA which has a lower ratio as compared to its European counterparts. In the case of the former